Last week, the Opportunity Equity strategy gained 12.36%, outperforming the S&P 500’s 7.36% gain (Exhibit 1). The strategy ended the week up 14.39% YTD, 406 basis points ahead of the S&P 500
Exhibit 1: Preliminary Performance of Opportunity Equity Strategy Versus S&P 500, Through 11/13/201
| Time Period | Opportunity Equity | S&P 500 |
| Last Week (11/6 - 11/13) | 4.72% | 2.21% |
| MTD | 17.66% | 9.74% |
| QTD | 17.15% | 6.82% |
| YTD | 19.79% | 12.77% |
| Inception (annualized since 6/26/00) | 8.10% | 6.59% |
Source: Bloomberg, Miller Value Partners
Farfetch Ltd. (FTCH) had another strong week as they reported 3Q earnings that came in well above expectations. The company posted revenue of $437.7mm vs. consensus of $369.8mm with gross margins of 48% against estimates of 45%. This helped the company reach an EBITDA loss of just -$10mm, vs. expectations for a -$22mm. The company guided for GMV growth of 40-45% in 4Q as they expect high levels of promotions from their competitors and they expect to reach EBITDA profitability in the fourth quarter. JP Morgan raised their price target to $62 from $48, (upside of 35.8%), BTIG raising their target form $62 from $48 (upside of 35.8%), and Oppenheimer increasing their target from $32 to $52 (upside of 13.9%). DXC Technology Company (DXC) rose through the 50-day, 100-day, and 200-day moving averages as they named Ken Sharp as their new CFO. Ken Sharp joins from Northrop Grumman where he was CFO of Defense Systems. There were a number of price target changes on Uber Technologies (UBER) following earnings the week prior. Keybanc increased their price target to $50 from $48 (upside of 5.0%), after Barclays increased their price target to $50 from $43 (upside of 5.0%), and JMP increased their target to $58 from $42 (upside of 21.8%) among others. TechCrunch reported that Uber is in talks to sell its Autonomous Technology Group to Aurora Innovation. Boeing Co. (BA) rose as the FAA appeared poised to lift the 737 MAX ban from the skies that has haunted the company for well more than a year as soon as next week. Additionally, the company won a $9.8bn contract to upgrade Saudi Arabia’s F-15 fighter jets. The positive news prompted a price target raise at JPM Morgan to $190 from $155 (upside of 1.5%). The strong week pushed the stock above the 50-day, 100-day, and 200-day moving averages. Bausch Health Companies Inc. (BHC) rose through the 100-day and 200-day moving average on limited news. The CADTH Canadian Drug Expert Committee (CDEC) issued a positive recommendation for Duobrii for plaque psoriasis.
Exhibit 2: Significant Contributors to Performance, 11/6/20 - 11/13/20
| Name | Type | Return |
| Farfetch Ltd. | Equity | 7.6% |
| DXC Technology Company | Equity | 13.3% |
| Uber C32 Jan 2022 | Derivative | 11.8% |
| Bausch Health Companies Inc. | Equity | 17.8% |
| Boeing Co. | Equity | 18.6% |
Source: Miller Value Partners
Alibaba Group Holdings Ltd. (BABA) fell sharply through the 50-day and 100-day moving averages as Chinese regulators crafted anti-monopoly guidelines to curb the power of large digital companies in the country. The rules are aimed at preventing platforms from dominating the market and adopting anti-competitive practices. Barclays adjusted their price target from $360 to $365 (upside of 39.9%) and Nomura increased their price target from $353 to $361 (upside of 38.4%). Amazon.com (AMZN) stock dropped as the EU announced formal anti-trust charges against the company. The move dropped the stock below the 50-day and 100-day moving averages. The RealReal Inc. (REAL) fell after releasing 3Q results. GMV came in at $245.4M vs $252.8M expected with revenue of $78.1mm slightly below expectations of $78.5mm leading to adjusted EBITDA of -$29M vs -$28.1m expected. The company guided for flat GMV in 4Q YoY and reiterated that they can reach profitability with cash on hand. The company is very focused on building up inventory to be ready to return to growth in 2021. The stock fell below the 50-day, 100-day, and 200-day moving averages after running up before earnings. Multiple dealers slashed their price targets on Vroom, Inc. (VRM) this week. Wedbush dropped their target from $80 to $55 (upside of 51.8%), while JPM slashed their price target from $75 to $50 (Upside of 38.0%) among others. The price cuts came on the back of guidance that disappointed the market. The company reported 3Q revenue of $340m vs expectations of $311m with adjusted EBITDA of -$36m vs -$43m estimated with e-commerce units of 8,823 ahead of company guidance of 8,500-8,800. The company guided for e-commerce unit sales of 10,500-11,500 below consensus of 11,830 but gross profit per unit (GPPU) was guided higher than expectations at $2,050-$2,150 vs $2,046 estimated. There was limited news on Facebook Inc. (FB), which dropped -5.6%.
Exhibit 3: Significant Detractors from Performance, 11/6/20 - 11/13/20
| Name | Type | Return |
| Alibaba Group Holding Ltd. ADS | Equity | -13.0% |
| Amazon.com Inc. | Equity | -5.5% |
| The RealReal Inc. | Equity | -14.9% |
| Facebook Inc. | Equity | -5.6% |
| Vroom, Inc. | Equity | -15.9% |
Source: Miller Value Partners
1The performance figures reflect the results of a representative account net of management fee and certain other expenses. For important additional information about Opportunity Equity performance, please click on the Opportunity Equity Composite Performance Disclosure. The performance returns shown in this report are preliminary and are subject to revision. Past performance is no guarantee of future results.
Significant Contributors and Significant Detractors are the Strategy holdings that had the greatest effect on Strategy performance for the week. Holdings that have been in the Strategy since the end of the most recent calendar quarter are identified by name. For information on how Contributor/Detractor data were calculated and a list showing the contribution to the Strategy's weekly performance of each investment held at such quarter end, contact us.
Any views expressed are subject to change at any time, and Miller Value Partners disclaims any responsibility to update such views. The information presented should not be considered a recommendation to purchase or sell any security and should not be relied upon as investment advice. It should not be assumed that any purchase or sale decisions will be profitable or will equal the performance of any security mentioned. Past performance is no guarantee of future results, and there is no guarantee dividends will be paid or continued. Content may not be reprinted, republished or used in any manner without written consent from Miller Value Partners.
©2019 Miller Value Partners, LLC
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